Chinese stocks mixed as investors weigh hopes of infrastructure boost

SINGAPORE – Asia-Pacific stocks were largely higher in Thursday trade, as investors in the region watched for market reaction to the Bank of Japan’s latest monetary policy decision.

Mainland Chinese stocks closed mixed, with the Shanghai Composite rising 0.58% to 2,975.48 while the Shenzhen Component dipped 0.225% to 10,628.92.

In Hong Kong, the Hang Seng index jumped about 1.4% higher, as of its final hour of trading.

When we see the economy weakening further then we get the government stepping in with new measures to stabilize growth but… it’s more reactive than proactive and I think that markets are waiting for something stronger, more proactive.

Dan Fineman

co-head of equity strategy for Asia-Pacific, Credit Suisse

Chinese President Xi Jinping on Tuesday called for an “all-out” effort to construct infrastructure. His comments come as mainland China has since March been facing its worst outbreak of Covid-19 since the initial shock of the pandemic in early 2020.

“What we hear from government figures will matter a great deal more for markets than what the GDP numbers are. The GDP numbers are always going to be backwards looking whereas China’s economy and markets are very much policy-driven,” Dan Fineman, co- head of equity strategy for Asia-Pacific at Credit Suisse, told CNBC’s “Street Signs Asia” on Thursday.

“What we’re getting right now is, I would say, fairly reactive policy. When we see the economy weakening further then we get the government stepping in with new measures to stabilize growth but… it’s more reactive than proactive and I think that markets are waiting for something stronger, more proactive, “he added.

Dollar-yen touches 130

The Bank of Japan on Thursday announced its decision to hold steady on its monetary policy, a largely expected move. The Japanese central bank also said in its monetary policy statement that it “expects short- and long-term policy interest rates to remain at their present or lower levels.”

Following the announcement, the Japanese yen weakened more than 1% to 130.25 per dollar, as compared to an earlier high of 128.32 against the greenback. The Japanese currency has for weeks weakened against the dollar, with expectations the Bank of Japan is set to be relatively slower in normalizing monetary policy as compared with peers such as the US Federal Reserve.

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The Nikkei 225 in Japan led gains among the region’s major markets on Thursday, rising 1.75% to close at 26,847.90 while the Topix index climbed 2.09% to 1,899.62.

Japan’s retail sales rose more than expected in March, according to government data released Thursday. Retail sales gained 0.9% in March as compared to a year earlier, above median market a forecast for a 0.4% rise, according to Reuters.

Elsewhere, South Korea’s Kospi advanced 1.08% to finish the trading day at 2,667.49 while the S & P / ASX 200 in Australia gained 1.32% to 7,356.90.

MSCI’s broadest index of Asia-Pacific shares outside Japan traded 1.13% higher.

Currencies and oil

The US dollar index, which tracks the greenback against a basket of its peers, was at 103.40 – continuing to hold above the 102 levels it crossed earlier this week.

The Australian dollar changed hands at $ 0.7142, off levels above $ 0.72 seen earlier in the week.

Oil prices were lower in the afternoon of Asia trading hours, with international benchmark Brent crude futures down 0.54% to $ 104.75 per barrel. US crude futures shed 0.39% to $ 101.62 per barrel.

– CNBC’s Evelyn Cheng contributed to this report.

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